- In MACRO, MARKETS & OIL NEWS, Eurozone inflation falls, France and Germany suffer, global stocks have a strong month and OPEC+ cuts production
- In TECH NEWS, Microsoft commits to the UK and gets a seat on OpenAI’s board, PwC pitches a deal chatbot, retailers use AI for inventory and there’s more drama at Twitter
- In FINANCIALS NEWS, Metro Bank cuts 20% of staff, Lloyds Bank is set to close more branches whilst being in the running to buy Tesco Bank and Robinhood takes aim at the UK once more
- In MISCELLANEOUS NEWS, Tesla’s strike stance grates with European ideals, the Cybertruck is finally ready to deliver Ford cuts profit forecasts, AbbVie is to buy ImmunoGen and the North East gets closer to developing mini-nukes
- AND FINALLY, I bring you a bit of music to end the week…
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MACRO, MARKETS & OIL NEWS
So Eurozone inflation falls more than expected, France & Germany suffer, investors have a good month and OPEC+ decides to cut production…
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Eurozone inflation drops more than expected to 2.4% (The Times, Jack Barnett) shows that Eurozone inflation fell by more than expected once more and is now at its lowest level in over two years. This was helped a lot by falling energy prices. * SO WHAT? * This brings European inflation much closer to the ECB’s official target. Although this could be interpreted as a victory against
inflation, it has come at a cost – economic growth. French economy shrinks and Germany’s jobless rise as recession looms for eurozone (Daily Telegraph, Tim Wallace) highlights this very issue – so given that the bloc is now within a whisker of its inflation target, you would have thought that the next move would be to cut interest rates. That said, ECB president Christine Lagarde is sticking to the line that “even having a discussion on a cut is totally premature”.
Then in Global stocks record best month in three years on interest rate cut hopes (Financial Times, Harriet Clarfelt and Nicholas Megaw) we see that global stock markets had a big month in November as momentum builds for the opinion that central banks’ war on inflation has largely been won. One Fed policymaker suggested earlier this week that cutting rates was looking more possible while futures markets are already pricing in a 0.25% interest rate cut by May. Europe’s surprising fall in inflation will no doubt add to this expectation!
Meanwhile, in oil news, Oil price falls amid market scepticism over Saudi-led cartel cuts (Daily Telegraph, Alex Singleton) shows that oil prices dropped by over 2% yesterday despite new production cuts being announced by OPEC+. At the same time, we heard the news that the US had produced a new record of 13.24m barrels in September. * SO WHAT? * Saudi Arabia and Russia agreed to deepening production cuts through to March next year but not every member of OPEC+ was committed, hence the market scepticism as to how effective the cuts would be. Fun fact: OPEC+ group members pump over 40% of the world’s oil.
Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!
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TECH NEWS
Microsoft invests in the UK and gets a seat on the board at OpenAI, PwC pitches a deal chatbot, retailers turn to AI and Twitter has more drama…
Then in Micosoft ‘vote of confidence’ in UK after ending Activision feud (Daily Telegraph, Matthew Field) we see that Microsoft announced plans to invest £2.5bn in Britain, showing that there were no hard feelings after the tech giant’s troubled takeover of Activision Blizzard. The £2.5bn will buy it a new data centre in west London and expanded computer capacity in Cardiff. The investment will also be used to train around one million people in digital skills and there’s also talk of expansion in the North of England. It was also interesting to see Microsoft takes seat on OpenAI’s board (The Times, Katie Prescott) as the tech giant has now got itself into a position where it can get access to confidential information. It won’t, however, be able to vote on key decisions, such as the selection of company directors. * SO WHAT? * Given how much money Microsoft has poured into OpenAI, it is surprising that it’s taken this long for it to get onto the board. However, I suspect that Microsoft’s support in OpenAI’s time of need bought it a LOT of goodwill. This further cements Microsoft’s position at the cutting edge of AI…
Talking of AI, PwC pitches chatbot that can make deals (Daily Telegraph, Adam Mawardi) shows that the Big Four accountant has just launched a new chatbot that can quickly work out whether acquisitions are worth making. The idea is that it will be used to speed up due diligence by summarising and analysing large amounts of client documents. It will also be able to provide PwC’s advisory team with guidance when completing a transaction. UK deals leader at PwC, Lucy Stapleton, said that “it’s about augmenting our teams rather than replacing our teams” just weeks after the company announced 600 redundancies in its advisory team…* SO WHAT? * I’m sure this could be very useful but I’m also sure that this is going to mean that it will replace a lot
of jobs as well! Still, I think that this is just another screening tool that dealmakers use – albeit a very useful one. PwC is hoping to licence the platform to clients.
Elsewhere, Retailers Are Turning to AI to Get Smarter About Inventory (Wall Street Journal, Liz Young) shows that retailers are looking at the use of AI to better predict shopper demand which will mean more accurate prediction of inventory levels. Such models are incorporating variables such as weather patterns and social media trends to guide decisions on how best to allocate inventory. Until now, retailers have relied on past sales data to predict consumer demand and stock their shelves accordingly. * SO WHAT? * The “old” model proved to be woefully inadequate over the pandemic as consumers moved en masse to buy certain products at the same time which resulted in inventory levels being all over the place. Initially, broken supply chains and consumer demand led to a build up of inventory that ended up not being sold as consumer behaviour shifted. Companies such as Walmart, Walgreens and ASOS are already using AI models to help them get the right products out to the right places at the right time. Makes a lot of sense, no? I think that although AI gets a lot of bad press, this is an example of where it can come in very useful.
Then in Twitter on brink as Musk embraces conspiracies (Daily Telegraph, Matthew Field and James Warrington) we see that Musk’s angry outburst earlier on this week to advertisers that had abandoned the X platform is unlikely to endear him to them any further as he told them to “Go **** yourself”. Charming. He complained that they were just restricting free speech, but the fact remains that, since he took over, the share price has more than halved. He is not making CEO Linda Yaccarino’s job any easier, that’s for sure! * SO WHAT? * It is interesting to note that some people are now saying that his erratic actions could be a way of trying to distance himself from X and blaming advertisers for the platform’s demise. Within the company itself, it seems there is already talk of further job cuts.
Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!
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FINANCIALS NEWS
Metro Bank makes big cuts, Lloyds closes branches whilst being in the running to buy Tesco Bank and Robinhood decides to have another go at the UK…
Then in Metro Bank to cut 20% of staff (Financial Times, Akila Quinio and Oliver Ralph) we see that the challenger bank is going to be making big cuts and review its seven-day-a-week opening policy in order to cut costs, following a refinancing earlier this month. The company also announced an overhaul of its board, with a number of them stepping down at the end of the year. The overhaul will also involve the automation of some of its services and back office operations and a push to more digitalisation. * SO WHAT? * It’ll be interesting to see how this works out given that such moves will chip away at what makes Metro Bank unique. However, given the trouble it’s in, such moves were inevitable to get it even remotely back on track.
Elsewhere, Lloyds to close another 45 bank branches (The Times, Ben Martin) shows that Britain’s biggest domestic lender is going to shut another slew of branches between March and November next year as banking continues to move towards digitisation but then Lloyds prepares bid to buy Tesco Bank as supermarket moves to offload lending unit (Daily Telegraph, Michael Bow) shows that it’s still aiming to expand in other areas as it has
emerged as a potential bidder for Tesco Bank as the supermarket aims to offload its lending unit. It’s not a done deal yet and Barclays is also rumoured to be in the mix. If it went ahead, it wouldn’t have too much of an impact as Tesco’s operations are pretty small.
Then in Robinhood trading app launches in UK (The Times, Ben Martin) we see that the trading app is going to have another crack at launching in the UK after a couple of false starts. The UK app will initially offer trading in American stocks when it launches in 2024, although it will aim to offer trading in London-listed shares and Isas over time. It will be its first foray outside its US market! Robinhood/UK: meme trader needs more arrows in its quiver for UK foray (Financial Times, Lex) points out that it has a challenge on its hands to turn us into a nation of share traders – at the moment only about a third of Britons own shares versus 60% of Americans. * SO WHAT? * It is unclear as to how it’s really going to monetise its offering because it makes money in the US by selling order flows to big brokers, which isn’t allowed over here. Also, it seems that cash-strapped younger Britons don’t have the interest in stocks that their American cousins do. I don’t think it’s impossible but I think that it will take an almighty marketing effort to change people’s behaviour!
Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!
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MISCELLANEOUS NEWS
In a quick scoot around some of today’s other interesting stories, Sweden’s Tesla strikes pit Elon Musk against European labour ideals (Financial Times, Richard Milne, Peter Campbell, Patricia Nilsson and Taylor Nicole Rogers) highlights Musk’s fight against strikes in Sweden as being a “clash of ideals”. * SO WHAT? * This is a massive generalisation/simplification, but working rights in Europe are generally better protected than they are in the UK or US. Putting it bluntly, it is generally easier to sack someone in the UK than it is in, say, France or Germany. If Musk loses in Sweden, this will have serious implications in his other factories around the world as there is a huge momentum building behind unionisation at the moment. I wonder whether the UK will try to sweet-talk Musk into building a gigafactory over here precisely because of the “flexible” labour force.
In more positive news for the company, Tesla’s Long-Awaited Cybertruck to Start at Roughly $61,000 (Wall Street Journal, Rebecca Elliott) shows that the company has finally started to deliver its much-anticipated Cybertruck to its incredibly patient customers after numerous delays! The entry level truck will retail at $61,000, which is about $21,000 more than it had previously said when it launched in 2019. Higher end versions will start at almost $100,000. The Cybertruck will be Tesla’s first new passenger vehicle model in over three years. * SO WHAT? * The launch will no doubt create a buzz around the brand once more that could filter through not only to Cybertruck sales, but also those of other models as well.
Elsewhere, Ford cuts profit forecast as labour costs rise (The Times, Lara Wildenberg) shows that Ford has joined rival GM in cutting full year forecasts due to lost production and higher labour costs thanks to union strikes.
Then in AbbVie to buy ImmunoGen in $10bn deal (The Times, Alex Ralph) we see that AbbVie is effectively buying a promising new technology for treating cancer. This will come in useful as its Humira drug, once the world’s biggest selling drug and AbbVie’s major revenue driver, has come off patent and the company’s drug pipeline has been looking a bit sparse.
Given all the difficulties that renewables seem to be facing at the moment, I thought it would be worth mentioning US company to develop mini-nukes in the North East (Daily Telegraph, Jonathan Leake) as the mayor of Tees Valley is on the verge of agreeing a deal with US nuclear power company Westinghouse to build Small Modular Reactors (SMRs – aka “mini-nukes”) in the North East. It comes at a time when the government is to publish its long-term nuclear roadmap which will set a timetable for how nuclear power will develop. Three sites have already been earmarked for SMRs in Redcar, Wilton and Hartlepool. This project is particularly interesting given that it will be wholly privately funded without any taxpayer subsidies. This project will be closely watched by many, I suspect!
Want to engage with myself and the team at Watson’s Daily about these stories? Why not ask us something in the Forum HERE. It’d be great to hear what you think!
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...AND FINALLY...
…in other news…
I thought it would be nice to end the week with a bit of music! Watch out for the cymbals 😁…
Some of today’s market, commodity & currency moves (as at hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!
FTSE 100 * | Dow Jones * | S&P 500 * | Nasdaq* | DAX * | CAC-40 * | Nikkei ** | Shanghai ** |
Oil (WTI) p/b | Oil (Brent) p/b | Gold Per t/oz | £/$ | €/$ | $/¥ | £/€ | $/₿ |
(markets with an * are at yesterday’s close, ** are at today’s close)